House of Representatives Committees

Government response

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GOVERNMENT RESPONSE TO HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON
FINANCIAL INSTITUTIONS AND PUBLIC ADMINISTRATION REPORT ON THE NATIONAL
COMPETITION COUNCIL'S 1996-97 ANNUAL REPORT

Recommendation - Raising community awareness of competition policy
issues The Committee recommends that Commonwealth, State and Territory
Governments and agencies involved in the implementation of National Competition
Policy devote resources to ensure community understanding and debate about
the contents of the policy.and its outcomes.

Response

Agreed.

The National Competition Council has developed a communications/education
package to assist parties affected by National Competition Policy reforms
to understand the nature of proposed reforms and their benefits and costs.

The Productivity Commission's review of the economic impact of competition
reforms on rural and regional Australia will also serve to raise the public
profile of competition policy.

Evidence of the benefits to consumers from competition policy is now
becoming available as reforms begin to have impact.

Under a key competition policy reform commitment, the full National
Electricity Market (NEM) commenced in December 1998. The NEM allows electricity
to be freely traded between New South Wales, Victoria, South Australia
and the Australian Capital Territory. Queensland is also soon to join,
following the construction of an interconnector with New South Wales.

As a result of competition, Australian residential electricity prices
have fallen by 7 per cent in real terms on average since 1993. This equates
to a real reduction of around $45 per year on an average household electricity
bill. For those jurisdictions participating in the NEM, the price savings
have been greater, in the order of $60 a year per household.

Since the advent of open competition on 1 July 1997, the Australian
telecommunications market has grown to 28 carriers. This new competitive
structure has led to real reductions in prices for consumers. For example,
the price of a phone call to the United Kingdom on the Optus network has
fallen from 84 cents per minute in June 1997 to 45 cents per minute in
June 1999 (based on the least expensive time to call).

According to a study by the Bureau of Industry Economics, Australia's
domestic airfares and freight rates are amongst the cheapest in the world
- and these lower airfares are a result of competition reforms and not
lower service standards. Domestic airfares have fallen by 18.4 per cent
in real terms in the period from September 1990 to June 1998.

The Commonwealth Government wishes to make examples of benefits of this
kind more widely known to the community.